The Central Board of Direct Taxes (CBDT) has issued Circular No. 8/2017 of 23 February 2017 clarifying that the existing provisions in place of effective management (POEM) will not apply to a company with a turnover or gross receipts of INR 500 million or less in a financial year.

The concept of POEM in determining the residential status of a company, other than an Indian company, was introduced by the Finance Act, 2015 and will take effect from 1 April 2017. The CBDT previously issued Circular No. 6/2017 of 24 January 2017 providing guiding principles for determining the POEM of a company.